Wednesday, August 11, 2010

Vinod Khosla: 'Only Interested In Shares of EEStor Inc.'

Vinod Khosla  Source
In late 2007 and 2008, one of the better ways to land a meeting with Vinod Khosla was to pitch a business plan that included almost any opportunity closely tied to EEStor Inc.   Khosla's keen interest in anything EEStor-related stems from his exposure to it during Kleiner Perkins' EEStor due diligence phase, a process that included Khosla's participation as a partner of KPCB.  Wikipedia points out that he started Khosla Ventures in 2004 but it was not a clean break as he was heavily involved in multiple investments beyond that date, according to SEC records.   Although he has publicly expressed doubts about EEStor Inc., insiders say Khosla is secretly one of EEStor's cadre of fanboys, and a rather frustrated one at that.

One of the firms in negotiations with EEStor to obtain a license in the early 2008 timeframe approached Khosla with their business plan and funding request.  He politely took the meeting but quickly cut to the chase:  was this firm offering any opportunity--now or in the future-- to obtain shares of EEStor?  No.  Khosla pointed out that the main reason he was willing to entertain the opportunity was on the chance that maybe the firm had positioned a deal with EEStor which would include an equity stake.   What he did not point out was that he very likely had access to more information about EEStor Inc. than the individuals making the pitch.



So why didn't he just pick up the phone and talk to his Kleiner buddies, in particular, Bill Joy, the lead partner on the EEStor investment and Khosla's co-founder of Sun Computer to inquire about obtaining shares of EEStor?   The simple answer is he most likely did but was turned down.  By this time, Kleiner had already recouped it's original investment in EEStor through a sale of a portion of it's shares to Mort Topfer and Mike Long, two individuals whose business experience more than their personal investments fit Kleiner's strategy of reducing risk.   What did Khosla bring to the equation?  At the time, nothing.  Reaching out directly to EEStor would have been a no-no as well given his former and at the time, ongoing relationship with KPCB. This left Khosla looking for alternative ways to gain access to the opportunity. 

One of the ways he attempted to do this was to do exactly what Kleiner Perkins proper has refused to do:  talk about EEStor.  Although no other Kleiner partner has publicly uttered the word EEStor since 2005, Khosla has used it liberally, allowing it to populate his powerpoint lectures (an illustrative example of what a 'black swan' is) and infiltrate his most reasoned blog posts.   But it's not simply references to EEStor that are so telling--it's the substance of the references. 

Khosla was at his gabbiest about EEStor a year ago in a guest article he penned for Grist.org on the limits of electric vehicles, an article he had to write after accidentally mentioning to earth2tech.com's Josie Garthwaite that "lithium-ion batteries are overhyped and will possibly be replaced."  The statement became Garthwaite's next headline (and sparked some blog discussion) even if it didn't inspire her to ask the question, "replaced by what?" Nonetheless, Khosla provided many interesting clues into his mindset regarding breakthrough energy storage and his article should be read with the intensity of an inspired young attorney.  

First, note especially Khosla's emphasis on manufacturing as trumping chemistry when it comes commercialization:
Selecting manufacturing processes that have been used successfully in lab-scale demonstration, in pursuit of "world's best," will not work for automotive markets. What is needed is scalable, low-cost manufacturing technology. Without that, the role of lithium ion batteries as a meaningful tool of carbon reduction will remain fairly limited.
But before you over-focus on manufacturing, note that he also says new "chemistries hold out more hope than the traditional style of lithium battery."   Newer chemistries than lithium ion?   I take Khosla to be speaking literally here and not referring to newer formulations of old chemistries such as lead acid.  He's talking about approaches  'even more disruptive' than that found in incremental innovations ie,  he's specifically referring to 'EEStor-like approaches' or ' new science similar to that proposed in its patents.'  


President Obama with Vinod Khosla on right.  Source.
With his investment in Recapping Inc., we can now see more clearly what Khosla is up to here.  When he talks about manufacturing improvements, he is specifically referring to the sorts of manufacturing that take place within integrated silicon circuit fabrication, an industry that makes traditional battery or capacitor manufacturing seem like blacksmithing.   This is supported by Recapping's first patent which became public late last week.  In it, we learn that "energy storage devices may employ core-shell protonated perovskite submicron or nano particles in composite films that have one or more shell coatings on a protonated perovskite core particle"  which according to ARPA-E has a chance of exceeding lithium ion in energy density while still being able to be labeled a capacitor by Penn State,  an organization with numerous relationships with capacitor companies all over the world.  Additionally, we learn ---as I stated previously---that although Penn State is working on developing the technology, they are not the primary inventors.  So who is?  Not so fast. 


If you work in the capacitor industry, it's probably not too difficult to imagine capacitor innovation coming from some organization other than Penn State.  Pockets of insight do exist.  But what does not compute is the idea of capacitor innovation coming from outside the capacitor industry.   We know this because for the past 3 years everyone everywhere has been telling all of us that experts in disk drives or memory or integrated circuits cannot overcome the cold hard facts spread out before us by the traditional material scientists carving away at incremental improvements in capacitor energy density.   Yet, here we go again because Recapping Inc.'s principle inventor appears to be just that--another integrated circuit fabrication freak like Dick Weir and Carl Nelson.   


Mark Wendman. Source
Hello World:  introducing Mark Wendman,  Recapping Inc.'s non-capacitor-expert, capacitor-breakthrough-inventor.  It has a fitting ring to it.  Wendman's background is eerily similar to Weir and Nelson's as far as someone like me can tell.   The only notable difference between Weir and Wendman (besides age/experience) appears to be Wendman's refusal to talk with anonymous bloggers about his work. ;-) ...which is not to say Wendman hates blogs.  No, he's been authoring one for the past  36 years judging from the number of posts....a prolific tendency that shows up in Wendman's commentary on other people's blogs as well.   


There are several reasons for me to like Wendman out of the gate. The first is that he likes to challenge skeptics and arm chair quarterbacks using real world experience working in chip manufacturing--at Intel and Motorola among others-- as many of his passionate posts attest.  Secondly, if he's chasing EEStor, he's come remarkably far since March 14, 2006, his likely first introduction to EEStor--an experience he documented in a now deleted blog post recovered from WayBackMachine.org.  I wonder if he was embarrassed to have mentioned EEStor and so deleted the post?  I know when I first started speaking with various folks at Penn State a couple years back, it was difficult to glean any credibility for DW and CN based on integrated circuit innovation.  (of course that changed at some interesting point--thanks to Wendman?)  


Regarding Recapping's ARPA funding, some have suggested the BEEST program is another example of big government giving away funds for the sheer joy of it.  According to several officials within ARPA, this is a false conclusion.   According to ARPA program manager and scientist, Dr. David Danielson (PHD MIT),  


We would never fund something where there was a physics based show stopper because it would be a waste of taxpayer dollars.  I havent seen data that tells me there is a physics based show stopper for capacitive approaches to energy storage. There are very strong practical challenges and obviously, with your blog you know there's a lot of controversy around this subject which sometimes keeps people away from a subject. We aren't afraid of controversy but if we see a physics based show stopper, we aren't going to waste time or money on it.  But if there's controversy somewhere and there is big upside opportunity, what a great place for ARPA to work. 
David Danielson: ARPA
Source: TheEEStory User BigMig
Danielson went on to explain ARPA's rigorous due diligence process to evaluate the numerous proposals they received under the program.  First, in a clear nod to my own anonymity, ARPA's process has called for keeping the evaluators anonymous.  Danielson:  "These are definite leaders in the field" something echoed to me by more than one person seeking BEEST funding.  These experts began by reviewing/scoring concept papers and after a downselect, they met together in DC to discuss and select the final promising projects.   ARPA director, Dr. Arunava Majumdar (of Lawrence Berkely National Lab fame) also held veto power over all projects with his personal review being the final hurdle to an award.   The net of this process has caused Danielson to make a prediction, "at least one of these BEEST funded projects is going to be a game changer. I have high confidence in that."


So now here we are again with yet another strange, little-understood technology laid out in a strange published patent by a stealth startup company who got funding after pitching the idea to Vinod Khosla (and/or Kleiner) and claiming energy densities greater than lithium ion in a capacitor format and invented by someone outside the capacitor industry.   The only substantial difference appears to be Penn State's involvement with Recapping, something you can't quite attach to EEStor unless you consider that Kleiner Perkins hired Penn State to evaluate EEStor prior to their investment.    Yes, the connections raise intriguing questions about whether or not Recapping is working on their own project or EEStor's project or a project that any determined expert in nanofabrication can figure out if they connect the dots.  At least one long time observer and fanboy of EEStor has stated he is happy to learn Recapping may give us another interesting shot on goal at capacitive energy storage.  (along with Stanford BTW)  


Recapping Inc. has declined repeated requests for comment about their work. They tell me they are too busy but I wonder if it's their story that's too hard to deliver with a straight face?  Vinod?  They, apparently, aren't too busy to have invested some time investigating me however--an amusing fact implied not so subtlety...not to worry, Lockheed did the same thing....so have others....a project with an uninteresting destination I'm afraid. 


Oh and one more thing...what does the name Recapping mean anyway?  Is it as in, "Recapping what we think we know..." or is it "Once it's capped, recap it again and again?"  ....or???






NOTE to the cadre: this post is not related to my Colombo tease. 


UPDATE: Many have asked about the link to Wendman's deleted blog post. Ive corrected the URL.  I recommend you go here:


http://theeestory.com/posts/139500/     ...where it is quoted.  The link to the archive is here:  


http://replay.waybackmachine.org/20060414135037...

Use a keyword search or scroll down to 'eestor.'













3 comments:

Bretspot said...

Fantastic article, keep up the great work B!

straker said...

Everybody knows there are more players than EESTOR in the supercap arena. So I'm not surprised by any of this. But like you said, these other players have refrained from the press and hence haven't been caught making false promises. They also don't have the suspicious stock arrangement like what EESTOR has with Zenn, which raises the specter of pump-n-dump scammery.

What comes to mind in all this is A123 systems which many of us thought would be the king of automotive batteries, who were not able to cut a deal with a major automaker. Or look at Altair with their Nano batteries that crashed and burned with the Phoenix, vs. Toshiba which has similar technology that it is currently rolling out in eBikes.

If this technology is valid, then it will be hard to keep competitors from exploiting it, patent or no patent.

gcs said...

Vinod, you'll have to buy ZNN shares like everybody else. At the moment they are at the lowest price they'll ever be, so put in your orders before the opportunity is gone.